Firms adhere to strict accounting rules with filing earnings. Yet, they also release “adjusted” numbers, designed to make bottom lines look more flattering. Usually, this indicates about 20% better profits. For many, corporate earnings seem to cause confusion amongst the fibbing. Yet, are the “adjustments” just distracting propaganda? (Source: The Economist)
More than 1/3 of financial services professionals making more than $500K a year say they “have witnessed or have firsthand knowledge of wrongdoing in the workplace.” The survey of traders and investment bankers in the US and the UK also found that 23% suspected their colleagues of wrongdoing (Source: Financial Times).
Employee Fraud is one of the biggest corruption threats, due to the rising pressure to deliver improved financial performance. There is quarterly temptation to cook the books, stuff the channel with inventory, or make side agreements with customer and partners.
When Bob Iger, CEO of Disney, received the CEO of the Year award a few years ago, he shared a mentor’s advice: “there is never a substitute for integrity. No matter what your business strategy was, no matter what initiative you were taking, no matter what decision you were making, it would never be and should never be at the sacrifice of integrity.”
Does earnings pressure create ethical wrong doing?
